Month: June 2014

Wisconsin City Discovers Multiple Benefits to End-of-Life Planning

In most places throughout the country, the vast majority of people have not engaged in end-of-life planning. According to an NPR report, only about 30 percent of people have an advance directive, living will or similar document. However, in LaCrosse, that number is far different. More than 95 percent of the people in that city have advance directives or other forms of end-of-life planning documents. As a result, the people of LaCrosse have served as an illustration of the numerous positives that families receive when proper end of life planning is put on paper in advance of needing it.

The high rate of end-of-life planning in LaCrosse, NPR states, is largely attributable to the work of the Gunderson Health System, which runs the local hospital and, specifically, one Gunderson employee, medical ethicist Bud Hammes. After counseling many families whose relative had become gravely or catastrophically ill with no advance directive in place, Hammes began training nurses at the hospital to inquire about filling out advance directives, in order to save future families from undergoing the “palpable” distress of those he’d been counseling.

Advance directives can often save families substantial emotional anguish as, depending on the injured or ill person’s circumstances, it may be necessary for the family to go to court and obtain an order appointing a guardian to make medical decisions, especially decisions regarding the termination of life-extending treatment. …

Landmark case holds that Inherited IRAs are NOT PROTECTED from creditors

In the next few weeks we will be reaching out to our clients and referral partners to inform them of the critical importance of safeguarding IRAs and other retirement accounts they will some day pass on to their beneficiaries.

On June 12, 2014 the United States Supreme Court handed down its opinion in Clark v. Rameker. The Court held unanimously that retirement funds inherited by a beneficiary from the original plan participant are not considered to be “retirement funds” within the meaning of the federal bankruptcy exemptions found at 11 U.S.C. §522(b)(3)(C). As a result, a debtor’s bankruptcy trustee may consider the inherited IRA to be an asset of the bankruptcy estate, available to satisfy creditors’ claims.

The Supreme Court has made it clear that U.S. Bankruptcy law will not protect the inherited IRA from the claims of a beneficiary’s creditors.

Importantly, the Court found that inherited IRAs do not operate the same way as an individual’s own retirement account. A participant’s own IRA is subject to early withdrawal penalties if taken out early, and an inheritor of an IRA must take out distributions from the inherited account either within 5 years of the plan participant’s death, or over the individual beneficiary’s remaining life expectancy as calculated under tables issued by the IRS determining annual Minimum Required Distributions.1

Working with us to establish a special Standalone Retirement Trust and properly complete the account’s beneficiary designation forms to fund the trust when the participant dies, then the client’s hard-saved retirement will not be wasted if their beneficiaries later end up with looming creditors.

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